Question
Asked Nov 5, 2019
Given the following diagram, what is the own-price elasticity of supply between points A and B?
P
S
2/15
а.
$60
В
b. 3/11
15/2
$30
с.
А
d. Can't tell; insufficient information
20
24
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Given the following diagram, what is the own-price elasticity of supply between points A and B? P S 2/15 а. $60 В b. 3/11 15/2 $30 с. А d. Can't tell; insufficient information 20 24

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check_circleExpert Solution
Step 1

The price elasticity of supply is the degree of responsiveness from the part of the producers towards the changes in the price level. Thus, it is the degree of change in quantity supplied with respect to the changes in the general price level for the product in the market.

Step 2

The price elasticity of supply can be calculated by dividing the percentage change in quantity supplied with the percentage change in price. In this case, the quantity and price at the point A were 20 units and $30 respectively. On the other hand at the point B, the price and output became 24 units and $60 respectively.

Step 3

When the own-price elasticity of supply between points A and B is calculated, the mid-point formula for ...

|(New quantity Old Quantity)
(New quantity +Old Quantity)
2
(New price-Old price)
(New price+Old price)
2
Elasticity of supply =
(24-20) (60-30)
(24+20
(60+30)
2
2
430
22 45
4x45
22x30
180
660
3
11
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|(New quantity Old Quantity) (New quantity +Old Quantity) 2 (New price-Old price) (New price+Old price) 2 Elasticity of supply = (24-20) (60-30) (24+20 (60+30) 2 2 430 22 45 4x45 22x30 180 660 3 11

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